| Summary: | 碩士 === 銘傳大學 === 經濟學系碩士在職專班 === 94 === From 1991, Taiwan began distribution of credit cards. By 1992, the Bureau of Finance had already allocated 16 credit card distribution licenses to appointed banks which commenced the beginning of the credit card revolution. To compete in the marketplace, each bank focused on developing new products that would be attractive to potential credit card users. As these banks focused on aggressively promoting their credit card products and competition increased, they neglected to implement appropriate financial control and risk management measures. The aggregation of this malpractice has led to the current high volume of defaults in making credit card payments impacting the overall stability of the Taiwanese banking environment. The question of how to adjust the dysfunctional credit approval process and how to decrease the amount of non performing credit card debts are the two most pressing dilemmas faced by issuing banks. As these issues have significant social and economic implications on the Taiwanese society as a whole, it is the focus of this research to analyze the fundamental difficulties underlying credit card issuance procedures and, furthermore, assess the overall operational efficiency of these banks.
This research is focused on the analysis of a foreign bank’s distribution of credit cards. A representative sample of 1,000 was taken between October 2003 and November 2005. It was discovered that 692 were actively making payments while 308 have defaulted. A through review process was first conducted into each representative sample’s credit card application, the issuing banks default records followed by a credit rating check with the Joint Credit Information Center. These results were then cross-referenced with historical information on delayed payments provided by credit research staff from foreign banks and, using Logit regression model, it was possible to narrow down and derive the primary causes underlying the high ratio of default credit card payments. The results indicated that, of those surveyed, the residence area, title / position, industry category, maximum credit card limit, number of cards subscribed, loans taken on credit and the presence of any cash advances were directly correlated to the incidence of delayed payments. It is hoped that the conclusions from this analysis will assist banking institutions to better understand what areas to focus on in making improvements to the approval process for credit card issuance in the future.
Key words: default risk, delayed payments, customer loans, Logit regression model
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